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Vicente Naves Ramos

MEXICO - Real Estate & Construction

Office, residential, and mixed-use projects in the pipeline

CEO, FREL

Bio

Vicente Naves Ramos has over 25 years of experience in real estate. Before his current position, he was the CEO of Conmex (2012—2014) and Deputy General Director of Consorcio ARA (2006-2011). Mr. Naves Ramos has a degree in civil engineering from Universidad La Salle and an MBA from Panamericana University’s IPADE Business School.

"Most of the projects that we have in the pipeline are more office, residential, and mixed-use and not just malls."

Which segment of the market will you prioritize in the years to come?

We are still considering diversifying but focus on residential vertical urban developments, hotels, and commercial, namely real estate of retail spaces, offices, and mixed-use projects. We do not plan to be involved in industrial in the short or medium terms.

What is different about the way FREL is developing malls today compared to how they were built 20 years ago?

Most of the projects that we have in the pipeline are more office, residential, and mixed-use and not just malls. There has been a change in the way we design malls and customers seek other experiences and new things to do in a mall other than going there to buy something. Related to that, the design is changing to generate different experiences and new things for customers. For instance, in two of our malls in the Fibra, we created what we call Espacio Latino, a concept where we have a mix of different Latin American stores with artists, designers, and producers showing their different offerings including art, clothing, or fashion, all related to Latin American experiences. This will be combined with culinary experiences in a food hall featuring the different Latin American offerings. This will also be combined with different experiences that we will have, such as tequila and mezcal tasting, mariachis to play music, or tango from Argentina. It will be a great offering and experience not only for foreigners visiting Mexican cities but also for locals because we will feature a combination of Latin American products, arts, culture, traditions, and history. We want to launch the concept strongly and then replicate in other parts of the country to contribute to Mexico’s world-class tourist attractions.

Is there a growing appetite in Mexico for mixed-use developments?

Mixed-use projects, especially in urban areas, are appealing for people because it is convenient to have different offerings close to their homes. In dense cities, such as Mexico City, it is convenient for people to be able to walk to obtain the goods and services they need on a daily basis. Grupo Frel has three projects in the area known as Uptown Polanco, a nice district already being developed with residential apartments, offices, shopping malls, restaurants, theaters, and many cultural things to see and do. Right in that area we have three projects and have also formed an agreement with other developers. We will create something unique for the country: public areas in private property. We are creating between the different projects a 1km-long pedestrian pathway that will have retail spaces along the corridor and plazas for restaurants, cafes, and so on, making it a vibrant and dynamic area of the city.

Has the volatility of the Mexican exchange rate affected your activities in any way?

In Mexico, we own and we manage two hotels, one in Cancún and another in Cabos. That is a great currency shield because most of the income comes in dollars and we have most of the cost in pesos. For our other projects in Mexico, the cost and revenue are both in pesos. Some of the construction materials and supply are linked to the exchange rate and we seek to sign an advance contract with a fixed price so that we have certainly on the currency side. Overall, we try to maintain our margins without increasing our prices.

Will the earthquake affect the real estate market in Mexico?

There are both positive and negative impacts. With some of these natural disasters, the economic outcome in the long term is positive because they incentivize investment and tend to make things move. Here in the city, some of the areas affected by the earthquake will suffer somewhat, though it will create opportunities in other areas that will spur residential and office construction. We have an oversupply of offices and part of the need created because of the problem will help with that situation. However, even in affected areas there will be opportunities because after the demolitions there will be new buildings erected while those that were not entirely damaged will be renovated.

What do you expect from 2017 and 2018?

I am positive about the growth opportunities. On one hand, I see the economy going well. The banks’ indicators are a great predictor of the economy in general and bank results in Mexico are positive. They are growing heavily in terms of commercial loans for cars, personal loans, and mortgages. That tells me the economy is going well. On the other hand, I am also positive because of the demographic bonus, which is a window of opportunity for every country at a certain stage and this is the case for Mexico, where the active economic population is larger than the non-economic population. We will have this situation at least until 2030. I see perhaps 12-14 months where people and companies will hold back investments and consumption a little to see what happens with the NAFTA agreement and the outcome of the presidential elections. If the proposed tax reform is approved in the US, then we would have to internally review how to stay competitive to attract investment and create jobs in the country. Overall, the basics of the economy are positive.

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